A lot of technologies have grown rapidly in popularity in recent years, including Artificial Intelligence, Machine Learning, AR/VR - and of course blockchain technology. Both startups and big corporations like banks and insurance companies are implementing the technology for a variety of reasons.
The first established implementation of blockchain technology, Bitcoin, received a lot of attention for its use as a means of payment and store of value. Here we offer a primer on the technology as well as an explanation of popular applications of blockchain tech.
What is Blockchain Technology?
A blockchain is a data structure that allows data to be stored and authenticated in a decentralized manner. It is similar to peer-to-peer architecture and its mechanisms provide data security. For more information on how blockchain technology works, read our article on blockchain programming for beginners.
The Benefits of Blockchain
Blockchain technology offers some key benefits, and it is because of these benefits that companies are so excited about the tech. We describe those advantages below.
1. Eliminates middlemen
By decentralizing data storage, blockchain tech eliminates middlemen which results in cost reduction. A classic example of this is cryptocurrency. Cryptocurrencies are not managed by any bank. There are no middlemen involved in a bitcoin transaction. The transactions happen in a fully peer-to-peer mode with no intermediaries.
2. Trust
Since there are no middlemen involved and every party can see the data in the blockchain, it provides more trust between the participating parties. In a centralized architecture, all the parties have to trust the middlemen which leads to dependency on the party.
For instance, when you use online banking, you have to trust your bank that they will send the funds to the recipient as planned. In the event that your bank defaults, you can’t really do anything.
3. Availability
Blockchain follows a decentralized architecture and so, there is no single point of failure in it. As a result, it provides for higher availability as compared to centralized systems. In centralized systems, if the system goes down, availability is completely lost for all parties.
As an example, if your bank’s core banking system goes down, you just cannot transact.
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4. Data Security
By implementing the hashing mechanism, blockchain provides high data security. In the event that any party tries to mutilate the data in the blockchain, the whole chain collapses.
Top Blockchain Applications
Blockchains can be used in practically all scenarios where middlemen are involved. Here are some interesting blockchain use cases where blockchain is currently being implemented:
1. Cryptocurrencies
This is the most well-known use of blockchain tech. The applications of cryptocurrencies in the early years at least largely focused on payments. Parties are able to transact with each other without the involvement of any bank. For instance, a person sitting in the United States can transfer bitcoins to someone in India without the involvement of a bank.
2. Advertising
Currently, companies like Google and Facebook control almost all of the digital advertising traffic. Here, Google and Facebook are essentially middlemen that control the advertising ecosystem. Using blockchain the producers and the consumers can be connected directly through a decentralized system.
3. Real Estate
Just like in advertising, in the Real Estate industry, there are middlemen in the form of brokers who often charge exorbitant fees for pairing the buyer with the sellers. Using blockchain, these middlemen can be removed from the process. Basically, instead of relying on centralized advertising/listing portals, a blockchain can be used where the producers (advertisers or real-estate sellers) can provide their ads/listings and consumers can see them directly without any middlemen.
4. Supply Chains
An international delivery has to go through a lot of steps. For instance, it goes through the courier service provider (like DHL), then goes through customs of the sending country, then through customs of the receiving country, and finally through the local courier service provider in the receiving country. The biggest issue in this supply chain is tracking the status of the shipment.
Companies are planning to implement blockchain across these parties so that all the parties involved can put status in real-time in the blockchain which customers can easily track. Using blockchain eliminates the management onus on one party and helps in decentralizing the load across all the parties.
5. Insurance
Insurance companies can use blockchains to manage data of people who have filed fraudulent insurance claims. This helps them verify the authenticity of the applicant when issuing the insurance claim. As an example, if applicant A applies for insurance at company B, B can easily use the blockchain to check if A has in the past filed fraudulent claims at company C. In case that has happened, B can decide not to issue insurance to A since A may again file a fraudulent claim at B. The best part about this system is that no single insurance company has to take the responsibility of maintaining this data.
6. Credit Ratings
The data is decentralized across the companies which establishes a lot of trust across the companies. Just like the insurance sector, the same logic can also be applied to banking where the banks are working on creating a data of defaulters. Currently, this is done by credit rating agencies. Banks are trying to eliminate these credit rating agencies by using blockchain where they will all share the data of defaulters in a secure manner.
7. Healthcare
The health records of patients can be securely stored in a blockchain so that when the patient visits another doctor, he/she can directly share those records with the new doctor. The best part about using blockchain here is that there is no need for a centralized portal where these records are stored. Therefore, the cost can be lowered significantly.
8. Voting
Voting issues remain a concern in this day and age. While digital systems have gone a long way in making the whole process more streamlined, it is still far from ideal. A blockchain-based voting system ensures that there is no fraud, all while being completely transparent. There are many platforms working on this solution right now, and the whole voting technology may catch on once it has been perfected.
9. Digital IDs
The immutable ledger that is the blockchain provides a tamper-proof record of an individual’s documentation - accessible only upon request by the authorized entities. In a world that is becoming increasingly digital, having secure and private access to digital identification is essential. Even the likes of Microsoft are hopping on board, and digital identities will be a major talking point with respect to blockchain tech in the coming decade.
10. Gaming
The video games industry is quickly taking to the use of blockchain tech, specifically non-fungible tokens (NFTs). Games often make use of in-game economies and unique items, and NFTs provide a way to facilitate that economy and ensure that players have access to their items across games. The video games industry is a billion-dollar one, so there is plenty of opportunity for the tech to showcase its potential here.
The List of Blockchain Applications is Growing
Blockchain technology applications are quite varied and powerful. It has the potential of being applicable in a large number of use cases.
As a result, a lot of startups are using it to provide solutions to banks, insurance companies, supply chain companies, and others. In fact, some startups are using a combination of multiple technologies to provide scalable solutions.
You can check out our blockchain programming tutorials as recommended by the programming community.
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